Banco Fator has chosen Banco Bradesco ( BBD , quote ) and Itaú Unibanco ( ITUB , quote ) as its 2012 top picks among big Brazilian banks. In a new report, the brokerage company remains confident on the forecast for the credit market and other economic factors in Brazil in the new year.
The institution reinforces their "positive outlook" for the sector. They say supporting this view is the projection for credit growth, optimistic job market signs and stable level of default.
"We remain optimistic about the big banks, particularly ITUB and BBD, and believe they will both benefit from this favorable backdrop," adds analyst Fernando Salazar.
Salazar believes Banco do Brasil ( BDORY , quote ) will benefit from "good economic fundamentals," although worries over its "greater need for capital than its main rivals."
Fator recommends "buy" for both BBD and ITUB, with targets of BRL 36.50 and BRL 40.30, respectively. This represents upside potential of roughly 15% for each stock.
As for the mid-sized banks, Banco Fator best bets continue to be ABC Brasil and BIC. Fernando Salazar says both institutions can disclose positive results and attractive returns on equity.
For the expert, other key factors that may affect banks' performances in 2012 are the lower interest rates that will pressure on the financial margins. Also, he considers that the banks should reduce their cost efficiency level, with the exception of BDORY.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.